Kim Yong-beom breaks silence on policy controversies after resignation
Former presidential chief of staff for policy Kim Yong-beom speaks during a press conference at Cheong Wa Dae, March 9. Korea Times photo by Wang Tae-seok
Outgoing presidential policy chief says leveraged ETF launch coincided with global market correction
Outgoing presidential policy chief Kim Yong-beom spoke out Tuesday about the introduction of single-stock leveraged exchange-traded funds (ETFs) and the government's controversial housing policies, both of which had made him a target of opposition calls for his resignation.
Kim, who stepped down after 15 months in office, said he was unfairly portrayed as the main culprit behind losses suffered by leveraged ETF investors, arguing that the timing of the product's introduction happened to coincide with a global market correction.
In a telephone interview with the Hankook Ilbo on Tuesday, Kim emphasized the circumstances surrounding the introduction of leveraged ETFs in late May. At the time, the won-dollar exchange rate had surged above 1,500 won per dollar, putting pressure on the government to stabilize the currency.
“At the time, we discussed why Koreans were investing disproportionately in the U.S. Nasdaq,” Kim said. “That led us to discuss differences in financial products available in Korea and the U.S., and that was how the idea came up.”
The benchmark KOSPI had previously climbed as high as 9,000 points before plunging, inflicting heavy losses on leveraged ETF investors.
“Because a global market correction happened to coincide with the launch of the ETFs, I was cast as the culprit responsible for increasing those losses,” Kim said, expressing regret over the perception.
The KOSPI index is displayed on a screen in the dealing room of Hana Bank in central Seoul, June 18, after the benchmark index surpassed the 9,000 mark for the first time. Korea Times photo by Shim Hyun-chul
He stressed, however, that the government had never encouraged ordinary citizens to invest in leveraged ETFs.
“The government did not encourage people to sign up for leveraged ETFs, did it?” he said. “There were certainly people who made aggressive investments at the time, and some of their losses were quite substantial.”
Dealing with unprecedented housing demand
Kim also addressed the government's housing policies, which have been cited as one of the main reasons for the decline in President Lee Jae Myung's approval ratings.
“Under the Yoon Suk Yeol administration, retail sales remained negative throughout its term,” Kim said. “Our government immediately moved to revive the economy through an additional supplementary budget, and then the semiconductor boom followed. As a result, the strength of demand, including demand for housing, became unprecedentedly strong.”
“You cannot suddenly increase supply, so how could we stop demand from exploding?” he added.
His comments reflected the government's view that it had little choice but to introduce measures aimed at curbing demand, given concerns that abundant liquidity in the financial system could otherwise drive housing prices sharply higher.
A family looks at an aerial view of apartment complexes across Seoul from the observation deck of the 63 Building in Yeouido, Yeongdeungpo District, Seoul, Sunday. Yonhap
Kim nevertheless acknowledged the adverse effects of the government's Oct. 15 housing measures last year, which expanded designated regulatory areas to all of Seoul and 12 areas in Gyeonggi Province.
“I painfully acknowledge the impact the measures had on the rental housing market, particularly because the sudden increase in regulatory restrictions led to a surge in demand from people seeking homes for actual residence,” he said.
Kim also commented on the Democratic Party of Korea's opposition to parts of the government's original tax reform proposal, including plans to tighten taxation on nonresident owners of a single home.
“There were certainly such aspects,” he said, while arguing that the party largely accepted the government's proposal. “I believe 95 to 98 percent of the rest of the tax reform package was adopted as originally proposed by the government.”
He said he hoped the public would also give due consideration to measures designed to prevent what he described as loopholes in the inheritance tax system, including potential abuses of the family business inheritance deduction.
Asked about the achievements he considered most significant during his tenure, Kim cited the stabilization of the won-dollar exchange rate, the creation of the 162 trillion won ($116 billion) Future Response Fund included in next year's budget and reform of the education grant system.
On the Future Response Fund, he said it established a framework for strategic investment in areas including young people, the future, regional development and education. “I believe it will be evaluated for a long time as a framework that enables strategic investment in these areas,” he said.
Kim also described the reform of the education grant system as a “miraculous agreement and innovation” achieved after decades of debate.
The reform ended the system under which education grants were automatically linked to national tax revenues, despite strong opposition from superintendents of education. Kim also cited the government's three megaprojects, seven future growth-engine SEED projects and its artificial intelligence strategy among the key achievements of the Lee administration's economic policy.
President Lee Jae Myung speaks during a government ministry briefing held at Cheong Wa Dae, July 16. From left are Minister for Government Policy Coordination Lim Ki-geun, Prime Minister Han Sung-sook, Lee and former presidential chief of staff for policy Kim Yong-beom.
Time for policy shift
Kim rejected speculation that his resignation was a dismissal prompted by a decline in Lee's approval ratings, with some polls putting the president's support in the 30-percent range.
“I had previously explained to the president that a shift in the government's policy direction was necessary,” Kim said. “The president had been concerned about who would take on the job, and this time he agreed to it.”
He stressed that the decision to replace him had not been made suddenly.
Asked about his plans after leaving office, Kim said he intended to spend some time reading, meeting with people he had not been able to see and traveling.
When asked whether he would consider returning to public office if an opportunity arose, Kim waved off the suggestion.
This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.